M.J.Rodrigues vs CYMA EXPORTS PVT. LTD.

IN this complaint, the complainants have sought the following reliefs: "Wherefore the complainants pray that this Forum may be pleased to pass : (1) an order directing the respondent to pay a sum of Rs. 8,67,195/- with interest at the rate of 18% p.a. from the date of complaint till the date of realisation; (2) for such other or further reliefs as this Hon''ble Forum may deem fit to grant in the circumstances of the case; and (3) for costs of these proceedings."

THE opposite party is a builder. THE complainant applied for a flat and the opposite party allotted a flat No. 1 on the 5th floor of "Suryamukhi" building which was to be constructed by the opposite party at No. 21, Grant Road, Bangalore, for a price of Rs. 3,25,000/-. THE opposite party entered into an agreement for the sale of the said flat with the complainants on 14.4.1980, as per Ex. C-1. The complainant paid a sum of Rs. 25,000/- to the opposite party on 1.6.1980, as per Ex. C-2, towards the price and agreed to pay the balance consideration amount of Rs. 3 lakhs, as per the terms specified under Clause 4(a) of the agreement for sale, Ex. C-1, in instalments on various stages of construction.

The opposite party was to complete the construction of apartment and deliver the same to the complainants on or before 31.5.1981.

THE complainants, thereafter paid a further sum of Rs. 1,50,000/-, as per receipts, Ex. C-3, C-4, C-5, C-6 and C-7, the last payment of Rs. 25,000/- was as per Ex. C-7 dated 13.12.1982. THE complainants, thus in all, made payment of a sum of Rs. 1,75,000/- to the opposite party by 13.12.1982. As per the terms of agreement, the complainant was to pay the 7th instalment only on the builders commencing 7th slab of the apartment building. But the opposite party did not commence the work of even the first slab by 13.12.1982. It is the further case of the complainants that the various flat owners who had thus made the payment to the opposite party constituted an Association called "Garden Apartment Owners Association" and through that association began to put pressure upon the builder-the opposite party, to commence the construction of apartments and to complete the construction at an early date.

A meeting was held between the opposite party and the office bearers of the Garden Apartment Owners Association on 18/4/1986, as per Ex. C-8, wherein the opposite party agreed to commence the work of construction on 1.5.1986 and complete the construction of the flats in "Suryamukhi" apartments by 1.6.1987. The opposite party had even agreed, as per Clause 4, in Ex. C-8, in the said minutes of the meeting, that he would not claim any cost escalation from the complainants and others. The opposite party even thereafter did not commence the construction. The complainants, further averred that the opposite party even upto this time has not completed the construction and in consequence of which the complainants suffered heavy loss and mental agony. The complainants nextly averred that when the apartment-holders including the complainants, began to put pressure upon the opposite party to complete the construction immediately; the opposite party began to demand cost escalation. The opposite party claimed cost escalation of Rs. 2,60,800/-, by its letter on 12.3.1991, as per Ex. C-12. The opposite party, by its earlier letters on 23/8/1990, as per Ex.C-10 and on 19/11/1990, Ex. C-1l, had persistently demanded cost escalation from the complainants.

THE complainants further averred that the opposite party had no right to demand cost escalation when there is no provision under the terms of agreement of sale, as per Ex. C.-l and the opposite party had specifically agreed, as Ex. C-8, that he would not demand for any cost escalation.

THE complainants nextly averred that when they could not get the flat from the opposite party till 1987, they purchased a flat No. 1-C, "Bharath" Apartments, Fairfield Layout, Race Course Road, Bangalore-1, in consideration of a sum of Rs. 5,10,400/- thus, the complainants have incurred additional expenditure of Rs. 1,85,400/- in purchasing the flat in "Bharath Apartments". The complainants, on the basis of these averments, sought the reliefs as narrated above.

The opposite party filed its version and admitted the fact that the complainants were allotted a flat, as claimed by the complainants in the complaint. The opposite party also admitted the fact of receipt of a sum of Rs. 1,75,000/- from the complainants. The opposite party has specifically admitted this fact at paras 3, 6 and 15 of its version.

THE opposite party further averred that it could not complete the construction of the apartments due to various reasons beyond their control. THE opposite party, has in this regard, at para 7 of its version, averred thus: "7.As regards the averments in the third paragraph of the complaint, while admitting that the construction was not complete as per the schedule fixed in the aforesaid agreement the rest of the contentions raised therein are vehemently denied and the complainants are put to strict proof thereof. THE respondents state that it is due to contengencies mentioned in Clause 6 of the agreement that they were unable to complete the construction on schedule. THE respondents state that they are not in any way responsible for the alleged financial loss if any suffered by the complainant as the inability to complete the project and deliver the flat on the date mentioned in the agreement was due to circumstances beyond their control which are explained in some detail hereunder: (i) THE respondents-state that between 1.11.79 and 28.2.83 cement was not easily available as it was controlled item. THE Government had taken a decision to allot only 1,000 bags (one thousand bags only) of cement per quarter to each high rise complex irrespective of the total requirements. Whereas the total requirement for Garden Apartments amount to Rs. 1,50,000/- bags. (ii) THE construction was also delayed due to the work being stopped by the Municipal Corporation because of cancellation of all high rise building plans in 1980 till they were re-sanctioned in 1981. Between September 1983 to December 1984 the construction of high rise buildings were stopped by the Government by Public notice immediately after the collapse of Gangaram Complex on or about 9.9.1983 which caused stoppage and delay in construction. Between January 1985 and Sept.1989 the construction was delayed due to the refusal by Municipal Corporation to grant occupancy certificate due to the State Government Circular of 1984 questioning the validity of plans/ buildings having a height of more than 55 feet (fifty-five feet). THEreafter non-availability of construction material as well as non-payment of escalation costs by the complainant and other purchases has been the main cause for the respondents being unable to complete the said project."

The opposite party further averred that it was justified in demanding the cost escalation from the complainants considering steep rise in steel prices, building materials and the cost of labour. The opposite party, nextly averred, that it was justified in cancelling the agreement itself.

THE opposite party further averred that this Commission has no jurisdiction to entertain the complaint as the complainant cannot be classified as a "consumer" and the "complaint" would not amount to "complaint" under the provisions of the Consume-Protection Act. The opposite party, on the basis of these averments, sought the complaint to be dismissed. During enquiry, the complainant examined himself as C.W-1 and got Ex. C-1 to C-23 marked in evidence.

THE opposite party did not lead any evidence nor filed the affidavit in evidence, nor got any documents marked on its part.

THE opposite party went on taking time after filing the statement of objection, but on the date the complainant was examined as C.W-1, the opposite party remained absent. Even on the next date of hearing, the opposite party, remained absent. So the learned Counsel for the complainants was heard. We have perused the pleadings of the parties and the documents filed by the complainants and heard the learned Counsel for the complainants.

Having regard to the pleadings of the parties and submissions made by the complainants, the only point that arises for our consideration is "whether there was any deficiency in service rendered by the opposite party and in consequence of which did the complainants suffer any loss or injury and, if so, to what compensation the complainants are entitled to?"

BEFORE considering the evidence, it is necessary to notice the preliminary objection raised by the opposite party. The objection raised was that the complainants cannot be classified as "consumer", nor the allegations contained in the complaint would amount to "complaint" as defined under Sections 2(1)(d) and 2(1)(c) of the Consumer Protection Act, 1986, so this Commission has no jurisdiction to entertain the complaint. The objection of the opposite party has to fail. The ruling of the National Commission in U.P. Awas Evam Vikas Nigam v. Karima Shukla, reported in I (1991) CPJ, 1 (NC), covers this point. This Commission also has in complaint Nos. 13, 67, 82, 107, 115 and 113 of 1991 held as under:- "M/s. Cyma Exports (Pvt.) Ltd., is the developer, builder in all these cases. They proposed to build and sell flats in three apartment buildings at Bangalore, called as - Silveroaks Suryamukhi Rajnigandha and entered into indentical agreements with the complainants. The considerations were to be paid in instalments during various stages of construction and the learned Counsel for the respondents admitted that each of the complainants has paid the full consideration in respect of the flat agreed to be built for him. The complainants in all these cases have alleged that even though the apartments were agreed to be completed and delivered during 1986 and 1987, the respondents have not so ar done so but on the other hand have stopped the work on the buildings and are demanding escalation charges to recommence the work. They have prayed for directions to the Respondents to complete and deliver possession of the flats and also for compensation. The respondents among other things have contended that the complainants are not consumers and therefore, this Commission has no jurisdiction to try these complaints. We have heard the learned Counsel on this question. It is argued by the learned Counsel for the respondents that the agreements, inquestion, relate to sale of flats which are immovable properties and therefore, this Commission has no jurisdiction to entertain these complaints. He argued that the respondents had purchased the lands on which the apartments are to be built and even though the consideration is paid in instalments by each of the complainants at various stages of the construction, what is agreed under each of the agreements is the sale of a particular flat, which is an immovable property, and therefore, the complainants are not consumers within the meaning of the Consumer Protection Act, 1986. The complainants Counsel contended that complainants are consumers as they have hired the services of the respondents to develop land and build flats and to sell the same to them and it is not a mere sale of immovable property. There is no dispute that flats are immovable property and if it is the case of mere sale of the constructed flats, this Commission will have no jurisdiction to entertain complaints. But on careful perusal of the agreements, we are conviced that the agreements are not for sale of flats pure and simple. In all agreements, the intention of the respondents is loud and clear. Their intention is to purchase prime land in the city, develop it, build flats at the cost of the complainants. The dominant aim is to construct the apartments and make a profit out of the services so rendered. Entire investment for the construction comes from the complainants. Even though in the ultimate analysis there is a sale of the flat involved. The dominant purpose is rendering of services. If that is so, we have no doubt in our mind that the complainants have hired the services of the respondents and they are all consumers within the meaning of the Consumer Protection Act, 1986. We are fortified in this view by the decision of the National Commission in U.P. Awas Evam Vikas Parishad (Housing & Development Board) v. Garima Shukla and Others in Grst appeal No. 5 of 1989, reported in CPJ of January 1991, Vol. 1. In the said case, the National Commission held that the Housing Development Board engaged in serving the public in the matter of providing housing by acquisition of land, development of sites, construction of house thereon and allotment of plots and houses to the public and, therefore, the persons who have been allotted house/flats/sites from the Board are consumers falling within the definition of Sec. 2(1)(d)(ii) of the Consumer Protection Act, 1986. In this case also the respondents have engaged themselves in acquiring the land, developing it and constructing flats thereon and sale of the flats to the intending purchasers. The decision of the National Commission applies on all facts of these cases. For the above reasons, we hold that the complainants are consumers within the definition of Sec. 2(a)(d)(ii) of the Consumer Protection Act, 1986 and this Commission has jurisdiction to try these complaints."

IT is not disputed that the opposite party - the builder allotted flat No. 1 on the 5th floor of "Suryamukhi" building which was to be constructed by the opposite party at No. 21, Grant Road, Bangalore in consideration of a sum of Rs. 3,25,000/- to the complainant. Ex. C-1 is the agreement for sale of the said flat entered into between the complainants and the opposite party which gives the details of the amount to be paid by the complainants at different stages of construction of the flat. It is also not disputed that the opposite party had received by 13.12.1982 in all a sum of Rs. 1,75,000/- from the complainants. The payments are evidenced by the receipts, Ex. C-2, C-3, C-4, C-5, C-6 and C-7. The opposite party has also specifically admitted the receipt of money from the complainants at paras 3, 6 and 15 of its version. The recital contained at para 6 of Ex. C-1 - agreement for sale, read as under: "6. Subject to the availability of cement steel and other building materials, electrical and/or power connection and drainage connection and subject to force majeure including any act of God, drought, flood and any other natural calamity and/or war, restrictions by the Government, Municipal Corporation or other public authorities or any other acts beyond the control of the Builders, the Builders agree to hand over possession of the said Flat to the Buyer on or before 31 May, 1981."

This would go to show that the opposite party was to complete the construction of the building and deliver the possession thereof to the complainants on or before 31-5-1981. That is the evidence of the complainant and also the averments contained in the complaint. The opposite party failed to complete the construction by that date, even thereafter upto this date.

EX. C-8 is the minutes of the meeting held between the opposite party and the Garden Apartment Owners Association on 18-4-1986 at Bangalore. At Clause 2 of the said minutes of the meeting, the opposite party had agreed to commence the construction from 1-5-1986 and complete the construction of "Suryanmukhi" apartments by 1/6/1987. The opposite party, even on 23.8.1990, EX.C-10 - its leter to the complainants, has stated that it had not yet completed the construction and demanded the cost escalation, that is the same version even in its letter dated 2/3/1991, as per EX. C-12.

THE opposite party has stated various circumstances, at para 7 of its version, as referred above, which caused delay in completing the construction of the building. THE opposite party has stated that there was scarcity of cement, the Municipal Corporation stopped the work, the Government had issued notice stopping the construction work of high raised building etc. THE opposite party has neither produced any material to prove this allegation made by it nor has lead any evidence either oral or documentary. THErefore, the averments made by the opposite party giving various reasons for the delay in construction of the flats, has remained only at the stage of allegations. THE opposite party has failed to establish these circumstances to justify in not completing the construction of the flat and hand over the possession of the same to the complainants as stipulated under Ex. C-1 and in the minutes of the meeting, under Ex. C-8. The material on record would further go to show that even in the month of April 1986, the opposite party had agreed to complete the construction of the flat at an early date and deliver the possession of the same without collecting any cost escalation by 1.6.1987. It is evident from the material contained in Ex. C-8.

Therefore, it is clear that the opposite party has failed to complete the construction and deliver the possession of the flat without any valid reason whatsoever. From this material it is evident that the service rendered by the opposite party is clearly deficient in nature.

IT is evident from the material on record, as referred above, that the opposite party failed to complete the construction and deliver the possession of the flat to the complainants, as per its promise made, and in our opinion, this lapse is due to the negligence on the part of the opposite party only. The complainants, who have made the payment of Rs. 1,75,000/- by the end of 1982 and so far have not been able to get the said delivery of the possession of the flat from the opposite party and, therefore, the complainants have been put to lot of suffering and injury and so the complainants are necessarily be compensated for the same.

THE complainants have claimed compounded at 12% p.a. on the sum of Rs. 1,75,000/- and also extra expenditure incurred in purchasing another flat in a sum of Rs. 1,85,400.00 As per the minutes of the meeting held on 18.4.1986, as per Ex. C-8, the opposite party was to deliver the flat to the complainants on complete construction on 1.6:1987 without collecting any cost escalation. The opposite party has failed to comply with this term of agreement, so in our opinion it would be just and proper to award reasonable interest on the amount of Rs. 1,75,000.00 paid by the complainants to the opposite party towards compensation from 1.6.1987 till its payment to the complainants. The complainants have sought a sum of Rs. 1,85,400/-, extra expenditure incurred by them in purchasing another flat. But the complainants have not placed any material to show the size and measurements of the flat purchased by them in Race Course Road, Bangalore.

THE complainants have sought interest at 12% p.a. compounded annually. In our opinion, it would be just and proper, if we award interest on the sum of Rs. 1,75,000/- at 18% p.a. from 1.6.1987. ORDER IN THE RESULT, therefore, this complaint is allowed. THE opposite party is directed to pay a sum of Rs. 1,75,000/- with interest thereon at 18% p.a. from 1.6.1987 till the date of its payment to the complainants. THE opposite party shall also pay a sum of Rs. 2,500/- (Rupees Two thousand and five hundred only) to the complainants towards the costs of the proceedings. THE opposite party shall pay the said sum so awarded to the complainants within a period of 2 (two) months from this day. Complaint allowed with costs.